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Airtel has liquidity, Vodafone to face challenge on AGR: Report
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SME Times News Bureau | 20 Jan, 2020
The dismissal of the review petition by the Supreme Court of Airtel and
Vodafone poses a stiff challenge to Vodafone Idea's survival while
Airtel has prepared itself with funds to meet the payments on time,
ICICI Securities Limited said.
Bharti Airtel has raised capital
to meet the liability, but VIL remains challenged. Airtel last week
raised capital of US $3 bn, which should help it meet its AGR liability
with the help of additional debt.
VIL promoters, Vodafone Plc and
Aditya Birla Group, have already mentioned that if the entire AGR
liability has to be paid, they will have to shut shop.
"We don't
see the situation for VIL being salvaged without government
intervention. Apart from other stakeholders in VIL, the government too
could be one of the most impacted parties if the company shuts down as
it is owed Rs 900bn in deferred spectrum dues, besides the AGR
liability," ICICI Securities noted.
"We also see indirect impact on PSU banks if VIL fails to cough up the money", it noted.
The
Supreme Court has dismissed the review petition filed by telcos on its
AGR ruling, which means the October 24 order continues to hold good.
Bharti
Airtel and Vodafone Idea (VIL) have disclosed their potential AGR
liabilities at Rs 343 bn and Rs 442bn respectively, which have to be
paid by January 23. Bharti Airtel has already raised capital of US $3
bn, which should help it meet the burden.
"But the same remains a
herculean challenge for VIL --a challenge that cannot be resolved
without government intervention, in our view. We continue to prefer
Bharti Airtel in the telecom sector as it is better prepared for a
worst-case scenario on the AGR front in addition to its superior
operational execution", I-Sec said.
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